The buyout offer is just the beginning of a process that will stretch into the fourth quarter of this year, when a deal is expected to be finalized. Things could fall apart before then if ATI stockholders or regulatory bodies were to object. Right now, that seems an unlikely prospect, but one never knows.

Since the offer was just signed last night, many details have yet to be decided, including a host of issues surrounding the integration of the two companies. At this point, we know that AMD intends to keep ATI as a separate business unit, but not a wholly or even largely independent subsidiary. We don't know the likely fate of the ATI brand name, either. AMD and ATI have lots of decisions to make, and those decisions could go a long way toward determining the character of the combined entity.

AMD expects to deliver PC platforms made possible by this deal in 2007 and to "reinvent what it means to provide processing altogether" in 2008. I've already mentioned the possibilities for CPU-GPU hybrids in a prior post, but hadn't attached a time frame to them. I believe any new chips targeted for 2008 would presumably arrive on the 45nm process node.

The word is that despite the persistent rumors over the past month or so, Intel and NVIDIA are both somewhat shocked by this news, which seems to be corroborated by the fact that neither company had a statement ready for the media and shareholders this morning in response to this major industry development. We have contacted both companies seeking comment and will report on their responses once we have them.

AMD intends to retain ATI's foundry-based approach to manufacturing chips in the next one to two years, and AMD execs have said they won't abandon the foundry approach arbitrarily. They pointed out that AMD has a relationship with foundry partner Chartered Semiconductor and said that adding TSMC and UMC to the list of partners would give AMD a strong position and lots of flexibility in terms of production capacity. Longer term, AMD sees manufacturing ATI's chips as a means of keeping its own fabs fully utilized.

I expect that AMD's manufacturing tech could enable much better Radeons, and could give AMD-ATI an edge over NVIDIA in GPUs. Although foundries like TSMC are very capable and don't tend to get too far behind AMD when it comes to process geometries, they don't have the same R&D resources that AMD does with respect to transistor development and the like. AMD's partnership with IBM has produced a number of advances, including silicon-on-insulator technology and masking techniques used to tune the 90nm fab process for low-power chips like the Turion 64 and Opteron HE. With AMD's manufacturing expertise, ATI will likely gain the capability to better tune its GPU designs for faster speeds, lower power, and higher yields.

The merger will inescapably strain relations between AMD and its other partners, including NVIDIA, VIA, and SiS, to name a few, but AMD's execs and spinners remain adamant that they'll keep their "customer-oriented" approach and not limit choice. Although AMD is moving toward offering complete PC "platforms" to certain markets, the company says it will not resort to the same suite of business practices that Intel has used to muscle out competitors in, say, the mobile market with Centrino. They're drawing a distinction between the maturation of the PC market, which they say has prompted the need for vertical integration, and what they claim are monopolistic practices on the part of Intel.

Before this news, AMD was working to counter Intel's platform-based approach in certain markets by developing and validating reference platforms with multiple chipset partners. Both ATI and NVIDIA had mobile platforms in the works with AMD, for instance. AMD is still talking of the possibility of offering such a validated platform in cooperation with NVIDIA in the future. Interestingly, AMD is also talking about a stronger combined AMD-ATI entity as opening up additional opportunities for third-party partners like NVIDIA, if the combined company can grow its CPU market share. We'll have to see whether NVIDIA views that opportunity the same once AMD is a direct competitor.

One way AMD could extend an important symbolic olive branch to NVIDIA and other industry partners would be to open up ATI's CrossFire multi-GPU technology to work on third-party chipsets. ATI has already allowed CrossFire to work on certain Intel chipsets, but unlocking the thing completely so chipsets from NVIDIA, VIA, and SiS chipsets can participate would go a long way toward easing the fears of partners and consumers. I talked with AMD's Hal Speed about this possibility, and he said they are evaluating that option. With luck, AMD will do the right thing here and remove the CrossFire chipset lock-out.

ATI "remains committed to Canada" and will be keeping operations there.

The question of the fate of ATI's license for the Pentium/Core processor bus was raised in this morning's conference call, but no definitive answer was given. ATI expects to keep selling chipsets for Intel-based systems at least until the deal closes in the fourth quarter. We will be checking with Intel on this one.

AMD execs expect significant cost savings in certain areas of operational overlap between the two companies$75 million by the end of 2007 and $125 million by 2008but also said they do not expect any layoffs as a result of the merger.

That's about it for now. We'll surely have more later, once we've spoken with Intel, NVIDIA, and others.